Minggu, 14 Desember 2014

RI'S ECONOMY EXPECTED TO GROW AT 5.0-5.6 PCT IN 2015

 By Andi Abdussalam
          Jakarta, Dec 14 (Antara) - Indonesia's economic growth has continued to drop over the past three years from relatively high 6.5 percent in 2011 to only about 5.3 percent this year.
         The Indonesian Chamber of Commerce and Industry (Kadin) has predicted economic slowdown would continue to hit the country until 2015.
         "The country's economy will not yet fully recover in 2015 on internal and external hurdles," Kadin general chairman Suryo Bambang Sulisto said on Wednesday.
         According to various estimates, Indonesia's economic growth next year is estimated to be between 5.0 and 5.6 percent.
         Researcher Moekti P Soejachmoem of the Mandiri Institute Research Center predicted that seeing the development of its growth over the past three years, the Indonesian economy would only grow at 5.3 percent next year, below the government's target set in the state budget at 5.8 percent.
         In 2013-2014, the country's economic growth had been on the decline  - down from 6.5 percent in 2011, 6.2 percent in 2012  and 5.7 percent in 2013  and an estimated 5.3 percent in 2014.

 
         The highest prediction of economic growth next year is made by the Institute for the Development of Economics and Finance (Indef) last month.
         It has predicted that the Indonesian economy will grow by 5.3 to 5.6 percent in 2015, which is lower than the government-set target of 5.8 percent.
         "The Indef's forecast is based on pressuring factors, including exports that cannot be boosted. This is not only because of the global condition but also due to the fragile structure of our industry," Executive Director of Indef Ahmad Erani Yustika said in his address at a meeting on the Indonesian Economic Projection in 2015.
         The government may be optimistic about achieving the economic growth target of 5.8 percent as there has been fiscal room to develop the economy by building infrastructure and providing social protection to the poor.
         However, the impact of the government's programs will not be felt in 2015.
         "There is still a time lag in the economic field. For instance, infrastructure that will see its construction begin in January 2015 will be completed only at the end of the year and can be enjoyed only by early 2016. So hindrances to economic growth will remain unsolved next year," he explained.
         Yustika emphasized that the government should improve the state of the bureaucracy to make them efficient so that they can contribute 0.2 percent to the national economic growth.
         "What the government can do is improve bureaucracy to make them efficient so that they can contribute to the economic growth, albeit by not more than 0.2 percent," he stated.
         The other economic growth prediction is made by the National Banking Association (Perbanas) which forecast that the country's economy would grow 5-5.5 percent in 2015 also slightly lower than the target of 5.8 percent set in the state budget.
         "All international agencies predicted the growth at 5-5.5 percent. We agree with the forecast. It is reasonable," Perbanas chairman  Sigit Pramono said on the sidelines of an economic dialog on "Risk and Governance Summit 2014"  recently.
         Sigit said normally economic growth would need a credit expansion of 3-4 times higher.
         An economic growth rate of 5-5.5 percent would needs the support of local bank credit expansion of 15-22 percent, he said.
         Bank Indonesia, the central bank, itself wanted credit expansion of 15-17 percent in 2015.
         Sigit said most banks already had high loan to deposit ratio (LDR)  of more than 92 percent, therefore, they could be more selective in offering credits.
         However, local bank credits are not the only driver of economic growth, he said, adding, there are other options such as funds from stock market and bonds issues, as well as loans from foreign banks he said.
         And more importantly, investment has impact.  "The investment sector would be the main driver of the country's economy in 2015," head of the Mandiri Institute Moekti P Soejachmoem said on Friday.
         Increase in the investment sector would have much greater impact than an increase in the government spending on economic growth, Moekti said.
         He predicted there would be challenges globally as well as domestically in 2015.
         The US economy is recovering but China and Japan are yet to struggle to wriggle out of the slump until 2015, he added.
         "The slump that hits the two Asia's largest economies would have its impact on Indonesia on falling prices of commodities that make up 60 percent of  the country's exports to China and Japan," he said.
         Domestic challenges are rising prices as a result of the subsidized oil fuel (BBM) price hike, falling exchange rate of rupiah  and political disharmony in the parliament.
         "The government needs to cooperate with the parliament to discuss revision of the 2015 state budget, but it would be difficult if the parliament remains split into opposing coalitions," he said.
         However, he said he as optimistic the parliament would not seek to oppose the revision over the cut in the BBM subsidy as the the subsidy fund would be use to finance infrastructure project and the program for the people's welfare.
         He predicted that inflation in 2015 would be around 5.1 percent, saying the impact of the BBM price hike would be felt only for three months.
         The rupiah exchange rate is predicted at the level of 11,950 per dollar  and Bank Indonesia benchmark interest rate at 7.8 percent, he said.
         He predicted the country's economic growth in 2014 would be 5.1 percent.
         Based on data from the Central Bureau of Statistics (BPS) the country's economy was 5.21 percent in the first quarter, down to 5.12 percent in the second quarter,  and to 5.01 percent in the third quarter.
         Moekti said there is no need to worry about the impact of an increase in the US central bank benchmark interest rate as a result of its plan to stop its monetary stimulus in mid 2015.
         "The disparity between our interest rate and that of the FED is still wide around 6.36 basis points which should be attractive for foreign investors," he said.***2***

(T.A014/b003/B003)
  
            

(T.A014/A/A. Abdussalam/Bustanuddin) 14-12-2014 23:1

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